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SECTION 1118
Exemptions from use tax
Tax (TAX) CHAPTER 60, ARTICLE 28, PART 3
§ 1118. Exemptions from use tax. The following uses of property and
services shall not be subject to the compensating use tax imposed under
this article:

(1) In respect to the use of property used by the purchaser in this
state prior to August first, nineteen hundred sixty-five.

(2)(a) In respect to the use of property or services purchased by the
user while a nonresident of this state, except in the case of tangible
personal property or services which the user, in the performance of a
contract, incorporates into real property located in the state. A person
while engaged in any manner in carrying on in this state any employment,
trade, business or profession, shall not be deemed a nonresident with
respect to the use in this state of property or services in such
employment, trade, business or profession. This exemption does not apply
to the use of qualified property where the qualified property is
purchased primarily to carry individuals, whether or not for hire, who
are agents, employees, officers, shareholders, members, managers,
partners, or directors of (A) the purchaser, where any of those
individuals was a resident of this state when the qualified property was
purchased or (B) any affiliated person that was a resident when the
qualified property was purchased. For purposes of this subdivision: (i)
persons are affiliated persons with respect to each other where one of
the persons has an ownership interest of more than five percent, whether
direct or indirect, in the other, or where an ownership interest of more
than five percent, whether direct or indirect, is held in each of the
persons by another person or by a group of other persons that are
affiliated persons with respect to each other; (ii) "qualified property"
means vessels and motor vehicles; and (iii) "carry" means to take any
person from one point to another, whether for the business purposes or
pleasure of that person. For an exception to the exclusions from the
definition of "retail sale" applicable to vessels, see subdivision (q)
of section eleven hundred eleven of this article.

(b) Notwithstanding any provision of this article to the contrary, the
exclusion in paragraph (a) of this subdivision shall not apply to the
use within the state of property or a service purchased outside this
state by a nonresident that is not an individual, unless such
nonresident has been doing business outside the state for at least six
months prior to the date such nonresident brought such property or
service into this state.

(3) In respect to the use of property or services upon the sale of
which the purchaser would be expressly exempt from the taxes imposed
under subdivision (a), (b) or (c) of section eleven hundred five. In
respect to the use of property to the extent that it is exempt from the
sales tax under subdivision (g) of section eleven hundred eleven of this
article.

(4) In respect to the use of property which is converted into or
becomes a component part of a product produced for sale by the
purchaser.

(5) In respect to the use of paper in the publication of newspapers
and periodicals.

(6) In respect to the use of property used exclusively for the
temporary construction, improvement, alteration or repair of any
building, structure or exhibit, located entirely on land owned by a city
having a population of one million or more and leased by it to a
corporation organized for the sole purpose of holding a world's fair and
confining its operations solely to preparing for and conducting such
fair.

(7) (a) In respect to the use of property or services to the extent
that a retail sales or use tax was legally due and paid thereon, without
any right to a refund or credit thereof, to any other state or
jurisdiction within any other state but only when it is shown that such
other state or jurisdiction allows a corresponding exemption with
respect to the sale or use of tangible personal property or services
upon which such a sales tax or compensating use tax was paid to this
state. To the extent that the tax imposed by this article is at a higher
rate than the rate of tax in the first taxing jurisdiction, this
exemption shall be inapplicable and the tax imposed by section eleven
hundred ten of this chapter shall apply to the extent of the difference
in such rates, except as provided in paragraph (b) of this subdivision.

(b) To the extent that the compensating use tax imposed by this
article and a compensating use tax imposed pursuant to article
twenty-nine are at a higher aggregate rate than the rate of tax imposed
in the first taxing jurisdiction, the exemption provided in paragraph
(a) of this subdivision shall be inapplicable and the taxes imposed by
this article and pursuant to article twenty-nine shall apply to the
extent of the difference between such aggregate rate and the rate paid
in the first taxing jurisdiction. In such event, the amount payable
shall be allocated between the tax imposed by this article and the tax
imposed pursuant to article twenty-nine in proportion to the respective
rates of such taxes.

(8) In respect to the use of spare parts (including engines),
consumable technical supplies, maintenance and ground equipment used
exclusively in the operation or handling or maintenance of aircraft, and
aircraft stores, brought into this state from a foreign country by a
foreign airline which holds a foreign air carrier permit, issued by the
Civil Aeronautics Board pursuant to Section 402 of the Federal Aviation
Act of 1958, as amended, to engage in foreign air transportation,
provided that:

(i) such property is to be used on aircraft (or directly in the
operation, handling or maintenance of aircraft) of the airline providing
foreign air transportation services (or such aircraft of another foreign
airline eligible under this subdivision); and

(ii) such property would not be subject to taxes imposed in the
foreign country in which the particular foreign airline is based if
brought into such country by a United States airline operating in that
country.

(9) In respect to the use of a thoroughbred, standardbred or quarter
horse purchased outside the state and brought into the state for the
purpose of entering a racing event or events on which pari-mutuel
wagering is authorized by law, and to prepare therefor. Provided,
however, that the exemption contained in this subdivision shall not
apply to any such horse which enters racing events in this state on more
than five days in any one calendar year. Nothing contained herein shall
alter the exemption provided to nonresidents, as specified in
subdivision two of this section.

(10) In respect to the use of horses purchased outside the state and
brought into the state for racing to the extent that the value of the
horse exceeds one hundred thousand dollars. On or before December
fifteenth, nineteen hundred eighty-five, and December fifteenth,
nineteen hundred eighty-six, the board shall report to the director of
the budget, the chairman of the senate finance committee and the
chairman of the assembly ways and means committee concerning the
benefits or costs associated with the provisions of this subdivision, an
assessment of any economic impact and appropriate recommendations. The
commissioner of taxation and finance shall provide to the board such
reports as are necessary to effect the board's mandate.

(11) In respect to the use of computer software that did not
constitute tangible personal property prior to September first, nineteen
hundred ninety-one, used by the purchaser, author or other creator, or
copyright owner in this state prior to such date.

(12) In respect to the use of prepaid telephone calling service prior
to the effective date of a chapter of the laws of nineteen hundred
ninety-nine which added this subdivision.

* (13) In respect to the use of the following items at a tasting held
by a licensed producer of alcoholic beverages in accordance with the
alcoholic beverage control law: (i) the alcoholic beverage or beverages
authorized by the alcoholic beverage control law to be furnished at no
charge to a customer or prospective customer at such tasting for
consumption at such tasting; and (ii) bottles, corks, caps and labels
used to package such alcoholic beverages.

* NB There are 2 sb (13)'s

* (13) In respect to the use within the state of a vessel, as defined
in section twenty-two hundred fifty of the vehicle and traffic law,
until the first of the following events occur:

(a) the use of such vessel within this state by the purchaser thereof
for a period in excess of ninety consecutive days;

(b) the date upon which such vessel is first required to be registered
pursuant to section twenty-two hundred fifty-one of the vehicle and
traffic law; or

(c) the date upon which such vessel is so registered.

* NB There are 2 sb (13)'s